Unemployment claims over 500,000: only third time in quarter century

516,000. That’s the number of people who filed for employment claims this past week. This is the highest number we have seen since September 2001, just after 9/11. The last time we saw claims over 500,000 before that was July 1992. Going back twenty-five years to 1983, we have seen jobless claims above 500,000 only three times. Granted, the pool of workers in the United States is much larger today. Nevertheless, this number suggests a deep, deep recession is coming.

Last week, I said we should expect some increases in the numbers given recent layoff announcements. And, boy, do we have some increases. There was absolutely nothing good about this report. Let’s break the numbers down.

Raw initial claims were much higher than anything we have seen in the past few months: 539,868. The seasonally-adjusted number of 516,000 puts the widely-followed four-week average at 491,000, up almost 160k from this time last year. All of these numbers are business cycle highs.

Raw continuing claims came in at 3.45 million, another business cycle high. Seasonally adjusted continuing claims of 3.897 million puts the 4-week average at 1.2 million above he level this time last year. The 3.897 million number is a new 25-year high.

The raw numbers should rise considerably because seasonal unemployment means a massive number of new claims in December-March. Usually, the biggest week for claims is the first week of the year. Last cycle we saw 4.7 million continuing claims in the week ended January 5th 2002 (the seasonally-adjusted number was only 3.6 million), where claims were only 3.2 million in November. That tells you we are going to see a huge rise in continuing claims here.

Can I stop there? There is absolutely nothing good about these numbers. See the charts below.